WINE: US Specialist on Investment

Recent Western Cape Business News

Mike Fisher, a founding partner of US investment banking firm Global Wine Partners, believes South Africa, with its excellent wine-growing conditions, the beauty of its winelands and competitive cost structures, is well placed to advance from its relative obscurity in the US to the point where it becomes better recognised for its quality offerings.

In South Africa in November to attend the annual general meeting of the Great Wine Capitals Global Network, he was impressed by evidence of the ability to make high quality wines here and also by the local wine industry’s sustainability initiatives, which he considered to be ahead of most of those in California.

However, in his view, South Africa was the least known of the major wine-producing regions amongst US consumers. “Go into any grocery store in the US and of the 300 wines on the shelves, you will be lucky to find more than one or two of South African origin.”

The success of boutique enterprises such as Vilafonté, in which well-known Californian winemaker Zelma Long and her viticulturist husband, Phil Freese, were involved at the Cape, or that of the Napa Valley’s Hess Collection’s investment in Glen Carlou, and similar projects, would in his view help to advance the country’s visibility as a quality producer amongst those with a keen interest in wine.

Meanwhile, Constellation’s Kumala and E&J Gallo’s Sebeka labels would help to build awareness in more mainstream markets, he said.

While “not overwhelmed” by most Pinotage he tasted, although there were some notable exceptions, Fisher, who initially trained as a winemaker, found South Africa’s expression of the Bordeaux varietals to be very good. He was also impressed by local Sauvignon blancs and Chenin blancs. “South Africa’s reputation as a producer of Sauvignon blanc is gaining ground. The same could happen with Chenin blanc but because it is still very much a secondary variety in the US, it will be a harder sell.”

Also a specialist in mergers and acquisitions, valuations, corporate finance and wine business advisory services, Fisher, whose company has offices in California, Sydney and Paris, says while it would be possible for US investors to buy land locally and produce quality wines very cost competitively, there was still the hurdle of having to sell South Africa first and then penetrating a heavily traded US market. “The difficulty of gaining traction in the US market is not unique to South Africa. If US investors were to produce in Argentina or Chile they would still have to fight for their place on America’s shelves.”